Minister of Finance: An important positive step restored confidence in the Egyptian economic program

More economic and social progress can be achieved in the coming period

Fitch Report

Financial and structural reforms; growth opportunities; and stability are the reasons for upgrading Egypt’s credit rating

Fitch expects that the government growth rates shall be exceeded this year

Minister of Finance, Mr. Hany Kadry Dimian, greeted Fitch Credit Rating’s decision concerning upgrading Egypt’s economy rating notch as an important positive step for reinforcing confidence in the Egyptian economic program, which will support the government efforts in providing funding for its development plans, in addition to decreasing the cost of this funding, as well as attracting more investments during next period, especially it is the first time that Fitch upgrades Egypt’s credit ratings after a series of downgraded rating within the past years.

International Credit Ratings Fitch announced on Friday evening upgrading the Arab Republic of Egypt’s credit rating by one notch concerning the long – term borrowing for both foreign and local currencies to B and so while keeping the Egyptian economy’s outlook “stable”. Fitch attributed this decision to the government implemented financial and structural reforms that would achieve economic stability and financial sustainability, as well as large growth prospects of the Egyptian economy on short and medium term, due to recovery of security and political stability.

Minister of Finance ensured the achievement of more progress on both economic and social levels during the coming period. He referred that applying financial and structural reforms is a must to realize a quantum leap in citizen’s living standard. He pointed that the government applies ambitious and balanced program to generate growth prospects in the Egyptian economy aim to increase employment rates, moreover achieve financial balance through rearrange spending priorities, increase the country’s resources to keep on financial and economic stability, support social safety nets, and a quantum leap in infrastructures and main public services to achieve human development.

Minister of Finance declared that upgrading the sovereign rating by Fitch along with praising the Egyptian economy by many international institutions. As well as, last month the government finalized its discussions on article IV with the IMF; whereas IMF’s mission praised the governmental economic program and its capacity of realizing the best possible benefit for the Egyptian economy through Egypt’s Economic Development Conference to be held next March in Sharm el-Sheikh.  

Fitch report declared that its decision is based on many positive political and economic developments, of which the government adopted transparent strategy to adjust medium-term public finance by enforcing structural procedures such as energy subsidy rationalization, tax base expansion; leading to improve expectations of overall general budget deficit, whereas Fitch expected that overall deficit shall decrease as a ratio to GDP to 10.2%, compared to 12.8% in 2013/2014, in addition to stopping deterioration of governmental debt indicators re-decreasing as a ratio to GDP.

Fitch predicted that the Egyptian economy in current fiscal year achieves GDP growth ratio of 4.2%, higher than the government expected ratios reached about 3.8% of the same year, compared to growth ratio average of 2% in last 3 years, in addition to the improvement of the balance of payments in the upcoming 2 years.

The report indicated that the stable political situations since Abdel Fattah Al Sisi has assumed office as president of Egypt, demonstrates that there is a public consensus to realize stability as per Fitch ratings.

 On the other hand, the report indicates to risks still being faced by the Egyptian economy which could negatively affect its credit rating, most important of which that, if the government does not continue in adopting the necessary measures to adjust Public finance, deterioration in the financial situation or the balance of payments or in case of, any political instability that could affect economic recovery.

Upgrading the Egyptian economy credit rating is a landmark, since the first Egypt’s credit rating issued by Fitch in 1997, which has been downgraded successively five times since 2011.

It is worth to mention that,  Minister of Finance Mr. Hany Kadry Dimian  announced previously the government’s vision and plan that would be implemented according to a specified timetable till the economic conference to be held next March to acquire Egypt a privileged position on the international investment map , as the government started implementing a national program of financial and structural reforms accompanied by social justice targeting programs, in addition to accelerating projects implementation to stimulate the economy and upgrade infrastructure .The next step is to convene with the IMF, that already visited Egypt last November to hold consultations for discussing the IV article  , then invite the international rating agencies to review its ratings concerning  the Egyptian economic outlook in light of the economic and political developments . This will be  followed by issuing Eurobonds in the international markets for the first time since five years .The next March Egypt’s economic conference will be an important  landmark within the internationally improvement of Egypt’s economic position .